I have VTSAX, VTIAX, and VBTLX in my taxable brokerage account. Of those VTSAX has the lowest dividend rate so it's probably the most tax-efficient. But VTIAX gives the foreign tax credit, so it's pretty good too. Though I am watching out for the international portion going too high because of the threshold for Form 1116.

I have VTSAX, VTIAX, and VBTLX in my taxable brokerage account. Of those VTSAX has the lowest dividend rate so it's probably the most tax-efficient. But VTIAX gives the foreign tax credit, so it's pretty good too. Though I am watching out for the international portion going too high because of the threshold for Form 1116.

I have VTSAX (US total market), VFIAX (US 500, purchased as a tax loss harvesting partner for VTSAX), and VTMGX (developed markets international).

The Form 1116 threshold of $600 is worth considering here. As long as you're working and have a relatively high income you'll probably get your full foreign tax paid back even if you have to fill out that form, but once you retire and your income drops that probably won't be the case anymore. Without the ability to take a credit for foreign taxes I think the foreign stocks go down a couple spots in the Bogleheads tax efficiency hierarchy. I've been just above that level for the past couple years so I started making new purchases of international stocks in my retirement accounts instead, and plan to sell some taxable international stock pretty early in FIRE to get back down below that threshold.

In this case, yes! You probably don't want to put money you need in 3 years in the stock market, and you want to keep your taxable account tax efficient so tax free bonds make sense in this case. The other thing to consider is your tax rate. If you're in a low tax rate you are probably better off using a taxable bond fund, paying the taxes, and still ending up with a higher yield than the munis.

I personally wouldn't use VWAHX, the High Yield tax exempt. It handled 2008 better than most high-yield bond funds, but I'm concerned about the finances of several states and cities, especially if we went through another severe recession. I'm specifically worried about the states&cities with unfunded pensions, the ones that already struggle to pay their bills, and the places where their tax base is leaving.

If you look through the bonds in VWAHX you will keep seeing the words, "Illinois, Chicago, Kentucky, New Jersey, and Puerto Rico."

Pension funding levels:Illinois: 36%Kentucky: 31%New Jersey: 31%

Everyone here understands compounding. If you are 1/3 funded for retirement on the day you retire things are going to get ugly, especially if your portfolio takes a big hit in a recession.

Don't completely discount taxable bonds though. The higher your tax bracket, the better deal that tax-free bonds will be. Conversely, there's probably some tax bracket below which you'll actually get a greater return from the taxable bonds (as these bonds have to offer the promise of a big enough return to compete even after the typical investor pays their tax). I haven't done much real research on where this break-even point is, but I'd bet it exists.